Bill will protect Ohioans from predatory lenders
The law is hoped to stop those who target people with bad credit.
By JEFF ORTEGA
COLUMBUS -- The state Consumer Sales Practices Act would be extended to cover mortgage lending practices, under a bill signed into law Monday by Gov. Bob Taft.
The new law, sponsored by state Sen. Joy Padgett, a Coshocton Republican, would also require state licensing of appraisers and require national criminal background checks for mortgage brokers, loan officers and appraisers.
Taft and others state officials credited bipartisan work in the Legislature for the new measure to combat so-called "predatory lending" practices.
"This is truly a victory for bipartisan action to address a huge problem in our state," said the Republican Taft.
"This bill represents historic protection for Ohio home buyers," Padgett said.
The law's effects
Under the new law, certain changes to mortgage terms would have to be promptly communicated to the consumer before any deal closes. Also, under the law, prepayment penalties would be banned for loans of less than $75,000.
"The menace of predatory lenders has been ravaging neighborhoods in our cities, suburbs and rural communities," the governor said before signing the bill at the home of a Columbus couple who had been victimized by predatory lenders.
So-called predatory lending has typically been associated with deceptive, high-cost home loans with excessive interest rates, fees and penalties.
Those types of lending practices have grown with loans that are offered at a higher cost than conventional loans to customers who have had credit problems, consumer advocates say.
The new law goes into effect in January.